The European indices followed yesterday’s losses with a calm, timidly rebounding open this Friday.
One of the main reasons the FTSE was so troubled on Thursday was the pound’s latest spurt higher against the dollar and euro, juiced up by a wave of vaccine optimism.
The index, then, will be disappointed that a truly dreadful UK retail sales reading failed to knock sterling down a peg or two.
For January retail sales contracted by 8.2%, against the -3.0% forecast. But though this is, technically, far worse than expected, it’s not exactly surprising, considering the lockdown that was swiftly put in place last month.
That perhaps explains why cable felt comfortable in shrugging off the reading, instead moving 0.2% higher after the bell, allowing sterling to cross the psychologically significant $1.40 mark for the first time since April 20th 2018.
The pound wasn’t as buoyant against the euro, retreating from Thursday’s 11-month-plus highs as it fell 0.2%.
Sterling’s decline can be explained by a mixed, but arguably positive, morning for Eurozone PMIs. Though the flash services readings in France and Germany both missed estimates – at 43.6 and 45.9 respectively – their manufacturing figures smashed forecasts. The French flash manufacturing PMI rose from 51.6 to 55.0, compared to the 51.7 expected, while the German number hit 60.6, its best level in almost exactly 3 years.
Even with the euro in ascendance – the currency also rose 0.4% against the dollar – the Eurozone indices also were able to take heart from those figures. The DAX and CAC both climbed 0.3%, in comparison to the handful of points the FTSE managed to add after the bell.
As for the US, the Dow Jones is currently facing an unchanged start to the afternoon session, the index looking for a steady open following last night’s tumble.
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